The New York Times is a gold mind this morning with three good articles on the economy. In the first, here’s the latest trend in health coverage:
Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.
With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.
The system means that the burden of expensive health care can now affect insured people, too.
No one knows how many patients are affected, but hundreds of drugs are priced this new way. They are used to treat diseases that may be fairly common, including multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers. There are no cheaper equivalents for these drugs, so patients are forced to pay the price or do without.
Insurers say the new system keeps everyone’s premiums down at a time when some of the most innovative and promising new treatments for conditions like cancer and rheumatoid arthritis and multiple sclerosis can cost $100,000 and more a year.
But the result is that patients may have to spend more for a drug than they pay for their mortgages, more, in some cases, than their monthly incomes.
The system, often called Tier 4, began in earnest with Medicare drug plans and spread rapidly. It is now incorporated into 86 percent of those plans. Some have even higher co-payments for certain drugs, a Tier 5.
Now Tier 4 is also showing up in insurance that people buy on their own or acquire through employers, said Dan Mendelson of Avalere Health, a research organization in Washington. It is the fastest-growing segment in private insurance, Mr. Mendelson said. Five years ago it was virtually nonexistent in private plans, he said. Now 10 percent of them have Tier 4 drug categories.
Private insurers began offering Tier 4 plans in response to employers who were looking for ways to keep costs down, said Karen Ignagni, president of America’s Health Insurance Plans, which represents most of the nation’s health insurers. When people who need Tier 4 drugs pay more for them, other subscribers in the plan pay less for their coverage.
But the new system sticks seriously ill people with huge bills, said James Robinson, a health economist at the University of California, Berkeley. “It is very unfortunate social policy,” Dr. Robinson said. “The more the sick person pays, the less the healthy person pays.”
Traditionally, the idea of insurance was to spread the costs of paying for the sick.
“This is an erosion of the traditional concept of insurance,” Mr. Mendelson said. “Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”
And often, patients say, they had no idea that they would be faced with such a situation… [emphasis added]
Inserted from <NY Times>
You can bet that Big Insurance is not talking about this in those glossy brochures they use to sell their product, especially to seniors. The language will be deeply buried in the most obtuse legalese in the policies. This highlights the need for universal, single-payer health care, because more and more, Big Insurance has stacked the deck against the most needy and the most vulnerable. This new system leaves two choices… Be rich, or be screwed.
Next, Paul Krugman has some insight into why consumers have lost confidence in the economy:
The Survey Research Center of the University of Michigan has been tracking American economic perceptions since the 1950s. On Friday the center released its latest estimate of the consumer sentiment index — and it was a stunner. Americans are more pessimistic about their situation than they have been for more than a quarter century.
Meanwhile, a recent Pew report found that the percentage of Americans saying that they’re better off than they were five years ago is at its lowest level in 44 years of polling.
What’s striking about this bleak mood is that by the usual measures the economy isn’t doing that badly — at least not yet. In particular, the official unemployment rate of 5.1 percent, though rising, is still fairly low by historical standards. Yet economic attitudes are worse now than they were in 1992, when the average unemployment rate was 7.5 percent.
Why are we feeling so down?
Our bleakness partly reflects the fact that most Americans are doing considerably worse than the usual economic measures let on. The official unemployment rate may be relatively low — but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high. Gross domestic product is up, but the inflation-adjusted income of the median family is probably lower than it was in 2000.
Beyond that, perceptions of the current economy are strongly influenced by the public’s sense of the larger pattern.
When Ronald Reagan famously asked, “Are you better off than you were four years ago?,” the correct answer was “Yes.” Median household income, adjusted for inflation, was higher in 1980 than it had been in 1976. But gas lines and double-digit inflation made people feel that things were falling apart.
Conversely, unemployment was still historically high when Reagan proclaimed “Morning in America.” But people were ready to hear an upbeat message, because the economic storm seemed to have passed.
More recently, economic confidence held up relatively well during the 2001 recession, maybe because people were willing to see it as no more than a temporary interruption of the great 1990s boom.
A major reason we’re feeling so down now is that for working Americans the boom never did come back. Job creation in the post-2001 recovery was pathetic by Clinton-era standards; wages barely kept up with inflation. Instead, corporate profits and the incomes of a tiny elite surged — sucking up so much of the economy’s growth that only crumbs were left for everyone else.
Now the boom that wasn’t has gone bust — and Americans, understandably, have lost confidence in the prospects for a return to real prosperity… [emphasis added]
Inserted from <NY Times>
Bush/McConJob/GOP economics succeed only at shifting wealth from the pockets of the poor and middle classes into those of the super rich and huge greedy corporations.
Now here’s how the super rich are enjoying those gains:
Who said anything about a recession? Sometime between the government bailout of Bear Stearns and the Bureau of Labor Statistics report that America lost 80,000 jobs in March, Lee Tachman spent roughly $50,000 last month on a four-day jaunt to Miami for himself and three close friends.
Karen Kennedy with her designer, Richard W. Gold. Ms. Kennedy is combining two apartments on the Upper West Side.
The trip was an exercise in luxuriant male bonding. Mr. Tachman, who is 38, and his friends got around by private jet, helicopter, Hummer limousine, Ferraris and Lamborghinis; stayed in V.I.P. rooms at Casa Casuarina, the South Beach hotel that was formerly Gianni Versace’s mansion; and played “extreme adventure paintball” with former agents of the federal Drug Enforcement Administration.
Mr. Tachman, a manager for a company that executes trades for hedge funds and the owner of “a handful” of buildings in New York, said he has not felt the need to cut back.
“I always feel like there’s a sword of Damocles over my head, like it could all come crashing down at any time,” he said. “But there’s always going to be people who are trading, and there’s always going to be a demand for real estate in New York.”
He is hardly alone in his eagerness to keep spending. Some businesses that cater to the superrich report that clients — many of them traders and private equity investors whose work is tied to Wall Street — are still splurging on multimillion-dollar Manhattan apartments, custom-built yachts, contemporary art and lavish parties.
Buyers this year have already closed on 71 Manhattan apartments that each cost more than $10 million, compared with 17 apartments in that price range during all of 2007. Last week, a New York art dealer paid a record $1.6 million for an Edward Weston photograph at Sotheby’s. And the GoldBar, a downtown lounge, reports that bankers continue to order $3,000 bottles of Rémy Martin Louis XIII Cognac.
“When times get tough, the smart spend money,” said David Monn, an event planner who is organizing a black-tie party on May 10 for dignitaries and recent purchasers of apartments at the Plaza Hotel; the average price there was $7 million. “Short of our country going on food stamps, I don’t think we’re doing anything differently.”
Some extreme spenders say they have not cut back on their impulse Bentley or apartment purchases because they have made so much money in the good times from the Internet, stock market and real estate. Some have been able to move their money into investments like private equity that are available only to those with extensive capital. Some rationalize cars and home renovations as “investments.” And some simply don’t want to skimp on the weddings and anniversary parties that they see as milestone events… [emphasis added]
Inserted from <NY Times>
Personally, I feel angry to see such obscene conspicuous consumption at a time when so many have to do without so much. These are the people who received over 90% of the benefit from the Bush/GOP tax cuts.
Seven years of GOP tyranny have transformed the US into two societies. There is free enterprise for the poor. They may help themselves in any way they can, on their own, as long as they can find some way to circumvent a system designed to transfer what little they have to the rich. There is socialism for the rich, as they often pay far less in taxes than middle class taxpayers. The GOP has aided the super rich in class warfare against the rest of us. They have created an economic pyramid that is so top heavy that the capstone is crushing the base.
McConJob supports the economic policies of the Bush Reich. I don’t care how angry you are at Clinton. I don’t care how much you dislike Obama. Given the certainty that a McConJob victory will collapse our economy, a vote in November for anyone other that the winner between Clinton and Obama is an act of economic suicide.
Cross-posted from Politics Plus